Written By: Matsheole Majoro
Every few months, a business leader or politician talks about South Africa’s employment crisis by saying that young people lack skills: “they are not ready for work”, “they don’t have the right attitude”, and “they are unemployable”. The word is used casually, but it carries a heavy connotation; if millions of people cannot find work, then surely the problem must be them.
That explanation is convenient for the people who repeat it. It moves the attention away from the labour market itself and avoids asking why employers are so hesitant to hire and why entry-level jobs have become so scarce and why the cost of employing someone is so high. The real challenge is the framework of the labour market.
Looking at what an employer faces when hiring a young and inexperienced worker, there is a national minimum wage that must be paid despite of productivity or experience. There are payroll taxes, UIF contributions and skills development levies. There are bargaining council agreements that go beyond union-negotiated table. There are dismissal procedures that make it hard and costly to end an employment relationship that isn’t working. There are employment equity requirements that contribute to administrative burden and legal risk.
These rules exist for a reason, minimum wages are meant to prevent exploitation, equity requirements are meant to correct historical injustices. These rules make hiring an inexperienced worker an expensive and risky decision. The employer who might have taken a chance on someone young now hires someone with a proven track record or chooses not to hire at all. The people who carry the cost of that decision are the same people the rules were meant to protect.
South Africa has one of the highest youth unemployment rates in the world: the unemployment rate among young people aged 15 to 34 is above 60 percent. These numbers don’t reflect a generation that simply refuses to work; they reflect a labour market that has priced young people out of entry.
The informal sector, which soaks up the surplus labour in most developed economies, stays relatively small in South Africa. This is not because South Africans don’t have entrepreneurial spirit, its because the informal economy is heavily regulated. Trading permits, health inspections and municipal laws make it hard to operate legally. Research shows that nearly 80 percent of informal businesses are unregistered. Many informal traders survive regardless of the state rather than because of it.
The skills debate is exaggerated; South Africa does not have shortage of artisans, engineers and healthcare workers. There are thousands of graduates in fields with no labour demand. The incompatibility is not between what workers can do and what employers need but between what the state is willing to fund and what the market rewards. This is used as an excuse to avoid tackling the barriers that keep young people out of work.
South Africans do not need another government training programme or a new youth employment scheme. The solution is the get rid of barriers that keep young people out of work. If an employer wants to hire someone with no experience, the national minimum wage should not stand in the way of a freely negotiated agreement. As skills grow, wages increase, this is how entry-level work has always worked in free labour markets. Trail periods should mean something: an employer who takes a chance on an inexperienced worker should be able to end the arrangement without facing a lengthy and costly legal process. Small firms should not be liable by wage rates by large manufacturers and unions. A spaza shop with 4 employees should be able to negotiate its own terms with its own workers.
The regulatory weight placed on informal traders should be lifted; a person selling food from her kitchen should not need a certificate of acceptability. Every licence that is terminated is a job that becomes legal.
The state needs to stop making employment expensive and enterprise illegal. Employers will hire when hiring is worth the risk, young people will work when work is available. The word ‘unemployable’ says a lot about the labour market more than it does about the people looking jobs.
The skills are there, the will is there, but the opportunity is not. Stop blaming the unemployed for a system that was created to exclude them. A country that makes it easier to hire will discover that the unemployable suddenly becomes employable.
Matsheole Majoro is a final year International Relations student and an associate of the Free Market foundation.
Dear Mr Majoro, for starters, Open, with your own money, a business, employing, for starters 12 black current unemployed than get back to us/me in 12 month with a feedback. Put your money where your mouth/pen is.